Video and Report Headlines
- 4wk High-Low Percent Indicators Remain Bullish
- SPY and QQQ Maintain Short-term Uptrends
- Using the ATR Trailing Stop with the Keltner Channel
- NVDA Leads with Steep Advance
- META Dips into Keltner Channel
- AMZN Works its Way Higher
- MSFT Consolidates within Uptrend
The next Chart Trader will be posted on Tuesday morning, March 19th.
4wk High-Low Percent Indicators Remain Bullish
About the Indicators: 4-wk High-Low Percent is the percentage of 4-week highs less the percentage of 4-wk lows within an index. These indicators turn bullish with a move above +20% (green bars) and bearish with a move below -20% (red bars). I am only focused on the S&P 500 and Nasdaq 100 for signals. The green shading on the chart above shows the active bullish signals for the S&P 500 and Nasdaq 100. The red shading shows the active bearish signals. The green arrows on the price chart show when 4-week High-Low Percent is bullish for both the S&P 500 and Nasdaq 100. This means BOTH must be bullish to signal a short-term uptrend in SPY. A downtrend signal triggers when BOTH are bearish.
SPY and QQQ Maintain Short-term Uptrends
There is no change in the short-term uptrends as SPY tagged a new closing high on Tuesday. With this latest high, SPY was up 25.84% over the last 92 days. The red line shows the ATR Trailing Stop (3 x ATR(22)) holding throughout the advance. This means “normal” pullbacks were less than 3 ATR(22) values. A decline greater than 3 ATR(22) values would show an outsized decline that could signal the start of a correction (as in mid August). Until then, it is up, up and away. For reference, SPY advanced 20% in 96 days from the March low to the July high. An outsized decline on August 9th (3 ATR drop) signaled the start of a correction that extended into October.
QQQ is lagging SPY here in March. Note that QQQ recorded a new closing high on March 1st and has yet to close above this high. At the time, QQQ was up 28.65% in 86 days. I am not reading too much into short-term relative weakness in QQQ because it is simply consolidating in the 440 area. The red line marks the ATR Trailing Stop (3 x ATR(22)) and 429.59 is the level to watch going forward. A break here would signal an outsized decline that could signal the start of a corrective period.
Note that there are four items to watch for a correction signal. First, we have 4-week High-Low Percent for SPY and QQQ. Second, we have the ATR Trailing Stops on the price charts for SPY and QQQ. A correction signal would trigger should all four of these trigger.
Chart Analysis, Setups and Trading Ideas
Using the ATR Trailing Stop with the Keltner Channel
The following charts show price bars with the Keltner Channel (22, 22, 1). The m,iddle line is a 22-day EMA, while the upper and lower lines are set 1 ATR value above and below. A dip below the lower line shows an oversold condition. A dip into the channel area shows a mild oversold condition or consolidation. The idea is to look for pullbacks when above the ATR Trailing Stop. Keltner channel signals are shown using %K in indicator window. A dip below 0 occurs with a close below the lower channel line and a break above 1 occurs with a close above the upper channel line.
The ATR Trailing Stop (22, 5) is used to define the uptrends. The uptrends are intact as long as these stocks hold their ATR Trailing Stops. A break below these levels would show an outsized decline and signal the start of a corrective period. Apple (AAPL), Tesla (TSLA) and Alphabet (GOOGL) are not included because they already experienced declines greater than 5 ATR(22) values. AAPL peaked in December and is testing its October low already. TSLA peaked in July and hit a nine-month low this week. GOOGL peaked on January 29th and is flat year-to-date.
Keep in mind that I am using the ATR Trailing Stop as a trend-following indicator. This means I do not want a signal triggering with a “normal” pullback. A dip below the lower line of the Kelter Channel is a “normal” pullback. I am waiting for an outsized decline to signal the start of a correction.
NVDA Leads with Steep Advance
The first chart shows the momentum king, Nvidia (NVDA). Notice that NVDA has held its ATR Trailing Stop for over a year (red line). NVDA broke out of a falling channel in early November, consolidated after this surge and zoomed higher in 2024. There was a dip below the lower channel line in early December, and then dips into the Kelter Channel in early January and mid February (blue arrows). NVDA remains in a steep uptrend with the ATR Trailing Stop at 784.12. It would take a decline greater than 5 ATR(22) values to break this level. This would be an outsized move that could signal the start of a corrective period. Until then, it is up, up and away.
META Dips into Keltner Channel
The next chart shows META holding above its ATR Trailing Stop for over a year now. META moved sideways from August to October, but did not decline more than 5 ATR(22) values and held its uptrend. The stock broke out in mid October, ahead of the broader market. There were two dips below the lower line of the Keltner Channel and then two dips into the channel (blue arrows). The ATR Trailing Stop is currently at 450.74.
AMZN Works its Way Higher
The next chart shows Amazon (AMZN) breaking its ATR Trailing Stop in September and forging a lower low in October. The stock surged with the rest of the market in November and broke out. It has since held the ATR Trailing Stop and worked its way to new highs. There was one dip below the lower Keltner line (blue arrow). There were also several instances when AMZN traded within the Keltner Channel, but these were not oversold readings. Overall, the trend is up as long as AMZN holds 160.97 (red line).
MSFT Consolidates within Uptrend
The next chart shows Microsoft (MSFT) with a break below the ATR Trailing Stop in mid August and a correction into September. MSFT broke out in late October and worked its way higher the last four months. The stock moved back into the Keltner Channel during this advance, but never broke the lower line to become oversold. MSFT is currently consolidating with a triangle and a breakout is in the works. The ATR Trailing Stop is set at 387.66.
